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Building the 21st-Century Law Firm
Posted May 01, 2017 01:30 am CDT
Technology is evolving at a staggering pace—much faster than most law firms can accomplish or pay to accomplish. It used to be that a firm faced with a large quantity of documents to review could hire the necessary contract lawyers and accomplish the job. Eventually, clients pushed back against the expense, and the e-discovery vendor world was born.
In the past, law firms tried to woo clients with technology. The problem was that a client would have to access its matters through separate portals at all the law firms it was using. Flash-forward to document management and document creation.
And now some firms are developing workflow software, plus project management software and client-specific dashboards that sometimes integrate work and billing.
There are more examples, but these illustrate the point: Technology is becoming a bigger and bigger part of law practice. But much of this technology is costly; and even if it could be acquired, mastering it takes training, time and commitment. Not to mention the cost of staying current as technology rapidly evolves.
But wait: There’s more. The pace of change, especially in the technology area, is accelerating. Things like Moore’s law—processor power will double every two years, the creation of data—4.4 zettabytes (1 zettabyte is a trillion gigabytes) in 2013 to 44ZB in 2020 to 180ZB in 2025), and so on. Consider the following view on the pace of change.
Futurist Ray Kurzweil posited in 2001 that we will experience something akin to 20,000 years of change—at the pace of 2001—in the 21st century. Many others have agreed that more change will occur faster than ever before.
If these futurists are remotely accurate, what will firms have to do? What should firms do now? The conundrum is particularly daunting for smaller firms that lack the resources to match BigLaw’s ability to invest in in-house technology. But even for BigLaw, using limited resources for more and more technology—which limits the so-important profits per equity partner number—poses significant management challenges.
In the face of the significant pool of tech talent, we must consider the topic of disaggregation. The book Alternative Fees for Litigators and Their Clients (by Patrick Lamb) discusses the importance of disaggregation of legal services.
“For every task, someone must decide who will perform it, and there are usually several different choices. … I believe each selection should be driven by the answers to these questions:
1. Who can perform the task at an acceptable level of quality?
2. Of those identified in No. 1, who can perform the task most cheaply?
3. If more than one option emerges from No. 2, who can perform the task most quickly?”
More and more often, the answers are that entities that are not law firms can perform tasks at a higher level of quality, at a significantly lower price and faster than any law firm.
Better. Cheaper. Faster. Is there something not to like?
TO THE CLIENT
Some collaborative technologies are “client-facing,” or primarily helpful to the client. Law firms—at least firms of a certain size—resist these changes because they make money from marginal quality of work slowly performed. Lots of money. And clients finally started to realize they had better alternatives for such work, and they began insisting their law firms collaborate with these “non-law-providers.”
It has been a modest success to date because many firms see these tech providers as competitors. A friend of ours in the document review business provides a world-class tech and process solution that costs a fraction of what law firms have charged and would charge for the same document review. Law firms hate the loss of the easy money, but the review by the tech provider is qualitatively and quantitatively superior.
Let us share one of the keys to the success of Valorem Law Group: We embraced Novus Law early in our existence. When we started the law firm, the founders agreed that we did not want to carry the number of associates needed to do document review on larger cases. We had an early contingency case where we hired and tried to supervise contract lawyers to do the needed document review. While the effort worked out, it was apparent that it was not the preferred way to go.
Fortuitously, we met the founders of Novus Law. We found that their deep expertise in document review—one that combined technology, human assets and extraordinary processes—provided precisely what we needed to be able to bolt on this capability when we needed to present ourselves to clients as having it, and we had a partner we worked with so seamlessly.
This example illustrates a competitive opportunity worth exploring further, since it represents the future. When law firms partner with a tech provider to offer cheaper, faster and better document review as part of the representation, the firms can show they have bandwidth to match or exceed bigger firms and therefore create a much greater chance of being engaged.
Look at the list of client-facing internet technologies—and a hat tip to Richard Granat, CEO of DirectLaw Inc., for providing us this list. And there are many more examples. In the March/April 2017 issue of Law Practice, Robert Ambrogi writes about “a golden age of legal tech startups,” highlighting 12 winning startups picked for slots at this year’s ABA Techshow from a much larger pool of companies.
The pool of startups may number in the thousands of companies, but it certainly is in the hundreds. The vastness of the pool may itself be a problem to be addressed in a different article, and we invite readers to share their favorite technologies in comments to this article. Our goal is not to provide a complete list of technologies for law firm use but highlight that effective use of technology will be a core component of success in the 21st century.
TO THE LAW FIRM
There are huge numbers of “inward-facing”—primarily helpful to the law firm—technologies available. Every day, we make use of older technologies, including Microsoft Word, PowerPoint and Excel, or accounting software such as QuickBooks.
While software allows firms to better operate, it does not replace, for example, accounting professionals. But now you can engage companies to do your billing, bookkeeping, payroll and CFO analytics. Two examples are the 4700 Group and 4L Law Firm Services, both of which can provide virtual accounting services.
Outside of billing and finance, companies such as ThinkSmart (using a workflow platform to automate processes) and web-based presentation design companies (SlideGenius, for example) are available at a moment’s notice. There is virtually no part of a lawyer’s business or practice for which back-office help is not available via web-based companies that specialize in servicing the legal market.
DEALING WITH RAPID CHANGE
What we have described is a significant change from the status quo of most lawyers. As such, active and passive resistance to the change is to be expected. Former U.S. Army Chief of Staff Gen. Eric Shinseki once told soldiers under his command: “If you dislike change, you’re going to dislike irrelevance even more.” Lawyers should consider this a word of caution aimed directly at our profession.
So it is appropriate to devote a few paragraphs to the topic of change.
There is a difference between “going for a walk” and “walking to the corner of State Street and Wacker Drive.” One is an activity and the other is a destination. Change is the latter, not the former, and so it must begin with a vision—the destination—clearly in mind.
The vision cannot be insignificant; if your change is too minor, you fall victim to inertia. If it is significant and you have not properly planned for it, you can easily convince yourself that achieving it is impossible. People who successfully climb Mount Everest report the first thing they focus on is the base camp. They eventually move to thinking about the next few steps. And only at the end do they think about the summit.
Our colleague Jeff Carr has identified the successful process of change as broken into stretch, step and leap phases. Stretch is the first motion away from the status quo in the direction of the change vision. It’s something, but not a lot. The next move is bigger—a full step that separates you from the prior status quo but is not quite all the way to the vision. And the leap traverses the remaining space to reach the vision. It is a pattern of change successfully applied in many environments.
In the context of our discussion of building a better firm through collaboration, a firm might pick an area —e-discovery, due diligence, contract drafting or some other—and identify a company with which they share a productivity vision. A productivity vision is how the parties can work together seamlessly to benefit the client.
LATHER, RINSE, REPEAT
Even though we are lawyers, none of us is perfect. That’s a hard thing for many in our profession to admit. But because it is true, no one will get the most out of a collaboration the first time you do it.
It behooves all of us to get better at collaborating, and the quickest way to improve is to learn from each experience. We suggest your efforts to collaborate and change include a vigorous after-action assessment program as part of the process.
Only the largest law firms can be everything to every client. Firms that fail to recognize this truth tend to find themselves economically vulnerable, since trying to be everything is expensive.
Firms that recognize the truth learn they sometimes need to be more than they are, even if for a short time. The opportunities to collaborate with other firms and service providers allow firms to be more than they are when the “more” is needed, but avoid the cost of trying to be more permanently.
This is akin to manufacturers adopting a just-in-time approach to inventory, instead of just-in-case. The pressure to utilize this collaborate-when-needed approach is growing, and embracing it is a key to the successful practice of law in the 21st century.
‘Client-facing’ internet technologies
Source: Courtesy of Richard Granat, CEO of DirectLaw.
Patrick Lamb, a 2009
ABA Journal Legal Rebel, and Nicole Nehama Auerbach are the founders of Valorem Law Group, a commercial litigation firm in Chicago.
This article originally appeared in the May 2017 issue of the ABA Journal with this headline: “Working With: Building a better law firm takes collaborators.”
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